Investors are rewarding Foot Locker (FL) for taking a step in the right direction.
On Thursday morning, shares jumped nearly 20%, with CEO Mary Dillon calling the first quarter a “strong start to the year.” The company’s “Lace Up Plan,” which includes efforts to improve its digital business, store experience, loyalty, and brand building, appears to be showing early signs of promise.
Same-store sales fell 1.8%, better than the 1.93% decline Wall Street had expected. Revenue was $1.88 billion, compared to the $1.89 billion expected, while adjusted earnings per share of $0.22 beat the $0.12 estimate.
The company reiterated its guidance for 2024, where same-store sales are expected to grow between 1% and 3%, while overall sales are expected to range between a 1% decrease and a 1% increase. It expects full-year EPS to be between $1.50 and $1.70.
This comes at a time when consumers’ discretionary income is being affected by prolonged inflation, declining savings, and rising interest rates.
Before the report, Foot Locker shares were down about 27% year to date, compared to the S&P 500 (^ GSBC) approximately 11% profit.
As part of the plan, Foot Locker unveiled a new store remodel (pictured below), which the company says translates to greater foot traffic and basket sizes.
The company opened four new stores this quarter and closed 37 stores. It remodeled or relocated 16 stores and updated 13 to current design standards.
Foot Locker plans to update two-thirds of its global Foot Locker and Kids Foot Locker locations over the next few years.
It is also investing in digital sales, including its FLX Rewards loyalty program, which has been tested in Canada and is expected to officially launch in the second quarter. It is showing early signs of “higher activations and average transaction metrics being tested,” according to Evercore ISI analyst Michael Benetti.
This is expected to allow the company to gain more consumer insights. Only 20% of Foot Locker’s transactions are through its loyalty program, compared to 60%-80% in the retail sector.
Dillon said the launch would “reinforce” its “demand flywheel” as it looks to become a modern omni-channel retailer.
Revitalizing relationships with brand partners is also key. The company said it is “working very closely on multi-year growth plans” with Nike, which makes up 60% of its portfolio, as the footwear brand refocuses on wholesale.
Dillon said the team is “very encouraged by the pipeline of innovation that has been shared from the Paris Olympics through the latter half of 2024 and then 2025.”
Earnings collapse
Here’s what Foot Locker reported for the first quarter, compared to Wall Street estimates, according to Bloomberg consensus data:
Adjusted earnings per share: $0.22 vs $0.12
he won: $1.88 billion versus $1.89 billion
Same store sales growth: -1.8% vs. -1.93%
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Brooke DiPalma is a senior reporter at Yahoo Finance. Follow her on Twitter at @Brooke De Palma Or email her at [email protected].
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